Knight Frank has taken a major step forward in expanding its investment management business by launching its first fund and holding a first close of more than £300m.
With fund management becoming increasingly competitive and highly regulated, the long-term viability of such divisions for agency firms has been cast into doubt in recent years – Cushman & Wakefield sold its investment management arm in 2014 prior to its purchase by DTZ.
However, Knight Frank has been pushing ahead with expansion. Last year it recruited CBRE GI’s Matthew McDonald, who will manage the new fund. Knight Frank Investment Management passed £1bn under management last October through segregated mandates, including one from the Lancashire County Pension Fund.
“The backing we have had from the Knight Frank board has been exceptional throughout the four years I have been here and any conflicts of being owned by a property services business have been easily managed,” said Kevin Aitchison, chief executive of KFIM and former UK chief executive of ING REIM.
The new open-ended fund will have no gearing and target a “low-risk and consistent long-term income return” of around 5%.
The equity has been raised from around 10 institutional pension fund clients of financial adviser Willis Towers Watson.
The fund will purchase properties in any sector throughout the UK that are well let and priced typically at £10m to £20m.
“We have already identified a good pipeline of potential opportunities. The focus will now be on ensuring that we invest the money as quickly and as efficiently as possible,” Aitchison said.
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